Zomato seeks CCI approval to invest in Grofers

By: |
July 01, 2021 3:00 AM

According to reports, Zomato and Tiger Global will collectively infuse about $120 million into Grofers with IPO-bound Zomato bringing in the larger chunk of the capital. The investment is expected to value Grofers at about $1 billion, giving it the status of a unicorn, the reports said.

ZomatoIPO, Zomato, grofers Zomato, India’s home grown unicorn, would be the first of many Indian tech startups to list on the stock exchanges.

Zomato has sought approval from the Competition Commission of India (CCI) for its proposed investment in Grofers.

“The notification form is being filed in relation to the proposed acquisition by Zomato of approximately 9.3% stake in each of Grofers India and HoT (Hands on Trades Private Ltd) along with certain rights in each of the Targets (Proposed Transaction),” Zomato said in its filing with the CCI.

“The proposed transaction will have no impact on the competitive landscape in any potential relevant market in India, in any manner,” the filing added.

Grofers India, the e-grocer’s Singapore-based parent Grofers International and HoT, a wholesale entity owned by the parent firm, have been collectively referred to as the Target. The filing mentions that HoT is engaged in the business of B2B wholesale trading with third party merchants.

Zomato and Grofers did not respond to FE’s queries.

According to reports, Zomato and Tiger Global will collectively infuse about $120 million into Grofers with IPO-bound Zomato bringing in the larger chunk of the capital. The investment is expected to value Grofers at about $1 billion, giving it the status of a unicorn, the reports said.

In a recent company blog, Grofers co-founder and CEO Albinder Dhindsa has mentioned that the company’s “next funding round is secure”.

Zomato’s investment in Grofers comes at a time when e-grocery services are witnessing heavy demand. The pandemic has nudged more people to take to online grocery shopping and analysts believe the trend is here to stay. Industry experts say India had an estimated 154 million online transacting households as of CY20, with 130 million either already using e-grocery platforms or willing to try. Tier two cities and beyond will be the next growth frontier for the segment players.

Following the onset of the pandemic in March last year, Zomato had introduced grocery services on the app but discontinued it after the food delivery business got back in shape.

The funding is expected to give Grofers the much-needed support to fight competition that is only getting bigger. The Tata Group is the latest entrant in the space with its acquisition of a majority stake in rival BigBasket. Deep-pocketed players Amazon, Flipkart and Reliance are already doubling down on the segment that is still nascent and provides enough room for growth.

Total losses for Grofers increased by over 40% year-on-year to Rs 637.49 crore in the year to March 31, 2020. The company incurred higher expenses which widened to Rs 814.29 crore in FY20 from Rs 531.62 crore in FY19. Revenue from operations, however, grew by a little over 135% y-o-y to Rs 165.27 crore in FY20.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.